As the automotive sector adapts to rising vehicle prices, shifting consumer behavior, and persistent inflation, the ripple effects are clearly visible in commercial credit activity. Experian’s latest Commercial Pulse Report (July 22, 2025) dives deep into the evolving credit dynamics within the auto industry—and one trend is clear: credit access is contracting across nearly every segment.
Used Cars Rise, But Credit Lines Fall
With the average new vehicle price exceeding \$47,000, many consumers are opting for used cars, priced more affordably at just over \$28,000. This shift has helped drive consistent growth in the used-car market, accompanied by an uptick in business activity and a growing demand for commercial credit.
In fact, used-vehicle and aftermarket service providers have seen commercial credit inquiries jump approximately 20% above January 2021 levels. Their credit utilization rate now sits at 32%, reflecting the costs of managing larger inventories and higher parts prices. But unlike traditional signs of financial distress, this trend appears tied more to operational needs than liquidity crunches.
Despite the increased appetite for credit, credit limits are shrinking.
A Cross-Sector Credit Contraction
Across the entire automotive supply chain, from OEMs to aftermarket shops, businesses are receiving smaller commercial credit lines on new originations than in previous years. The declines are significant:
- OEMs and New-Vehicle Dealers: Average commercial card limits have dropped by \$7.6K, now sitting at \$9.7K compared to \$17.4K in 2022–2023.
- Used-Vehicle Dealers and Aftermarket Services: Limits have fallen by \$5.8K, from \$13.6K to \$7.8K.
- Vehicle and Parts Wholesalers: These businesses faced the steepest cut—\$8.9K on average, down from \$18.5K to just \$9.6K.
All subsectors experienced over a 40% reduction in average credit lines, signaling tighter lending conditions despite robust business activity in several parts of the industry.
Why Are Credit Lines Shrinking?
This broad contraction is not purely about borrower risk. In fact, many used-car and aftermarket businesses have maintained steady commercial risk scores, and delinquency rates remain relatively flat.
A few critical factors include:
- Elevated Interest Rates: High financing costs are squeezing margins, especially for OEMs and franchised new-car dealers, where delinquencies are rising. Lenders may be proactively managing exposure.
- Segment-Specific Risk Trends: OEMs and dealers are facing mounting late-stage delinquencies—91+ DPD rates have nearly doubled since 2022—and their average risk scores are down ~4 points.
- Economic Uncertainty: Despite stable employment and wage growth, inflation, Fed policy, and geopolitical risk (like tariffs) are prompting more conservative credit practices.
- Portfolio Diversification: Lenders may be redistributing credit availability to less volatile sectors or industries with higher recovery potential.
The Middle Squeeze: Wholesale Distribution
Among the three major segments—OEM/New-Car Dealers, Used-Vehicle & Aftermarket, and Wholesale Distribution—wholesalers are caught in the middle. Their delinquency and risk score trends resemble those of OEMs, but their growing credit utilization and inquiry rates mirror the aftermarket segment. This dual exposure to shrinking new car volumes and rising parts demand puts them in a uniquely vulnerable position.
What It Means for Credit Managers and Lenders
These trends underscore the importance of granular credit monitoring. Treating the auto industry as a single credit risk profile is no longer viable. Subsector segmentation—by vehicle type, service focus, or market exposure—is key to understanding which businesses are truly at risk and which remain stable but under credit strain.
For lenders, this is a time to rebalance risk models and align credit policies with real-time sector insights. For businesses, it’s a moment to double down on credit management and strategic planning.
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Experian Commercial Pulse Report Explores Implications of Rising Premiums As the year draws to a close, one issue looms large for millions of small business owners: the rising cost of healthcare. According to the latest Experian Commercial Pulse Report, small business survival may soon hinge on a single factor — whether enhanced Affordable Care Act (ACA) subsidies are extended into 2026. Watch the Commercial Pulse Update The Clock Is Ticking on ACA Subsidies The American Rescue Plan and Inflation Reduction Act temporarily expanded ACA subsidies, helping make coverage more affordable for millions. But those enhancements are set to expire at the end of 2025 — a policy shift that could unleash a wave of economic strain. The Kaiser Family Foundation estimates that if these subsidies lapse, individuals who purchase insurance through the ACA marketplace could see a 75% increase in premiums. Why does this matter so much for small businesses? Because half of all ACA marketplace enrollees are small business owners, entrepreneurs, or their employees. Coverage Is Shrinking, and Costs Keep Climbing Smaller businesses have historically been less likely to offer health insurance benefits than their larger counterparts. In 2025, only 64% of businesses with 25 to 49 employees offer health benefits — the lowest level ever recorded. And while large employers are still required by the ACA to offer coverage to full-time workers, they too are feeling the pressure. Since 2010, employers have gradually reduced the share of healthcare premiums they cover, even as deductibles have risen by 164% for single coverage plans. The result? Business owners are being squeezed from both sides — by rising insurance costs and a more financially stressed workforce. The Ripple Effects Could Be Widespread If enhanced subsidies aren’t renewed, many small businesses may have no choice but to: Shut down operations Cut staff Shift jobs into larger organizations that can offer coverage That would be a blow not only to small business dynamism but also to broader economic sectors. Reduced consumer spending could hit industries like retail, real estate, and manufacturing, while healthcare providers face payment cuts and job losses due to shrinking coverage pools. What’s Next? With Congress set to vote on subsidy extensions before the end of the year, the stakes couldn’t be higher. The outcome will likely define affordability, access, and entrepreneurship for years to come. For small business owners, now is the time to assess your coverage plans, understand your employee needs, and prepare for potential cost increases. For policymakers and industry leaders, it’s a critical moment to ensure healthcare reforms continue to support the backbone of the U.S. economy — small businesses. Experian continues to provide actionable data to help businesses, lenders, and policymakers navigate uncertainty. To access the full Commercial Pulse Report and explore more insights on small business credit and sector-specific performance: ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts
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